28 June, 2017
IBD'S TAKE: Amazon.com has bounced off its 50-day moving average following the news that it's buying Whole Foods, but is a bit extended for a secondary buy.
"We've seen Amazon expand recently into physical, brick-and-mortar stores, for example their new bookstores and Amazon Go, their small grocery store experiment that doesn't require a customer to go through check out", says Elizabeth Lim, senior analyst for Mergermarket.
Kantor noted that Amazon's market cap gain roughly equaled the amount the company is paying for Whole Foods.
He said mutual friends set the companies up on a "blind date" in Seattle about six weeks ago, and executives immediately hit it off. "It was truly love at first sight", Mackey added. "We just had these big grins on our faces, like, 'These guys are incredible'".
However 14% have said they would consider working for the internet giant.
"Kroger would have to pay in stock, and their stock has been hurting", giving them less leverage to get into a protracted bidding war with Amazon, Culpepper said. "Whole Foods is our main competitor", said Bustamante.
"Like an old traditional marriage, where there are all kinds of rules and chaperones, we can't consummate the marriage until we're officially hooked up", he said. "This is not a Tinder relationship.I got a feeling I'm off script".
Beyond the romantic metaphor, Mackey also said the companies discussed what they could do together, though he could not share those plans until the transaction closed.
The Whole Foods chief said Amazon's technology will help the grocer transform from "class dunce" into "valedictorian". He noted that Amazon was known for its innovation.
"There's boundless ideas and synergies, and I think it will inspire some other interesting combinations between online and brick-and-mortar going forward", said Ripco Real Estate's Peter Ripka. "But I do wanna communicate.I am, like, super excited". The deal followed a scrape with activist investor Jana Partners, which had threatened to shake up Whole Foods' board and overhaul the chain. The top 10 grocery retailers plus Amazon control less than half of the market, Blackledge says, and a patchwork of several hundred grocery chains, convenience stores, dollars stores as well as mom and pop stores make up the remainder.
Mackey went on to ooze his enthusiasm for what Amazon would bring to Whole Foods Market's table, so to speak. Wilke also noted that Mackey would continue to CEO of Whole Foods, which prompted Mackey to interject by continuing the romantic allusion.
"From that, and depending on what they learn, we could see a strategy emerge in other realms, for example food manufacturing", she says. If you would like to discuss another topic, look for a relevant article.
"I dreamed that we merged with Amazon".
